National Competition Conference Public Interest Consideration in Competition Analysis Magdeline Gabaraane Director, Mergers and Monopolies Selebi - Phikwe 22 March, 2018

Outline PRESENTATION OUTLINE Introduction Mandate Main elements of the Act Consideration of Public interest in competition analysis Effect of public interest considerations on jobs Conclusion

CA established in April 2011. INTRODUCTION Government of Botswana adopted the National Competition Policy for Botswana in July 2005 Informed the development of the Competition Act of 2009. CA established in April 2011.

The Competition Authority enforces the Act which prohibits certain agreements, practices and conducts that are aimed at preventing or lessening competition in the market.

MAIN ELEMENTS OF THE ACT VERTICAL AGREEMENTS - Agreement between enterprises operating at different levels of the production chain HORIZONTAL AGREEMENTS - Agreement between two or more actual competitors (operating at the same level of production chain) ABUSE OF DOMINANCE --Dominance can be acquired inter alia by: 1) statutory protection 2) M&A’s 3) organic growth 4) anti-competitive advantage MERGERS -Acquisitions -Takeovers - Amalgamations -Joint Ventures

Factors (non-economic) considered by a Competition Authority during the assessment of the competition effects of a conduct, practice or agreement. Pursue the country’s public policy goals – protection of employment and exports; growth of SMME’s; competitiveness of local industries etc. Public interest can be used to justify abuse of dominance practices, anti-competitive mergers and exemption for anti-competitive agreements. More common in developing economies.

Public Interest Considerations: Abuse of Dominance AOD practices prohibited under section 30 of the Act AOD defined as enterprises with individual market share of 25%; combined market share of 50% Dominance not an offence in itself – it’s the conduct that matters. Assessment of Abuse of Dominance conducts Considers whether a dominant position exists Whether an AOD practice has occurred May consider whether the agreement or conduct – Maintains/promotes exports and or employment Advances strategic or national interest Provides social benefit which outweigh the harm Enhance CEE and SMME Enhances effectiveness of industrial development programs.

Public Interest Considerations: Merger Control Notifiable transactions When a business(s) acquires control over another – e.g., purchase of shares Transactions that meet the notification thresholds - P10 million annual turnover or asset value of target enterprise; post-merger market share of 20%. Assessment of mergers Prevention or substantial lessening of competition test Acquisition of dominant position Public interest considerations (not exhaustive)– Public benefit that outweighs harm to competition Improve production/distribution of goods and services Promote industrialisation maintain/promote exports or employment Advance CEE or SMME

Public Interest Considerations: Exemption Assessment Prohibited Agreements Prevent or substantially lessen competition Section 32 allows Authority to assess such agreements and permit them for a defined duration. Exemptions Assessment Authority may consider offsetting public benefits – Maintain lower prices, higher quality, greater choice Improve production/distribution of goods and services Promote industrialisation maintain/promote exports or employment Advance CEE or SMME

Effect of PIC on Jobs Merging parties Sector Jobs maintained Blue Star Diamonds Botswana & Blue Star Diamonds DMCC Financial 181 Golden Asset Management & Peermont Holdings Hotel and hospitality 607 Get Bucks & Sure Choice 9 The Prepaid Company (Pty) Ltd & 3G Mobile (Pty) Ltd ITC 20 Lacrose (Pty) Transport Holdings (Pty) Ltd Transport and logistics 191 Soihl Hong Kong Holding Limited & Chevron Botswana Energy 8 Botswana Venture Investments (Pty) Ltd & Waco International Holdings (Pty) Ltd Retail 73

The CA has considered public interest in its merger decisions; The factors considered have had the effect of:- Maintaining jobs Enhancing local procurement Enhancing entry of players in identified industries, e.g., petroleum Therefore, public interest considerations in competition analysis can indeed save jobs…..

Thank you! Competition Authority Plot 28, Matsitama Road, Main mall Private Bag 00101 Gaborone, Botswana (+267) 3934278 (+267) 3121013 Competition Authority - Botswana @CompetitionBots www.competitionauthority.co.bw CA@competitionauthority.co.bw